Cash on delivery (COD) is a way of shipping where the recipient pays for the goods at the moment they are delivered, not in advance. The carrier collects the agreed amount at the door or at a pickup point, hands over the shipment only after payment and then transfers the money to the shipper. The amount to be collected is stated on the waybill.
What is Cash on Delivery?
Cash on delivery is also known as collect on delivery, payment on delivery or simply COD. The principle is simple: no payment, no goods. The name dates from a time when the driver literally collected banknotes. Today the recipient often pays by card at the door, although some carriers still only accept cash.
A few terms always come with cash on delivery. The COD amount is the sum the carrier must collect, usually the price of the goods. The COD fee is what the carrier charges for collecting and transferring that money. The shipper gives the cash on delivery instruction, the recipient pays and the carrier makes sure the money ends up in the right place.
Cash on Delivery vs. Cash Against Documents
The two terms sound alike and are often confused. They work very differently. With cash on delivery, the carrier collects payment from the recipient when the goods physically arrive. With cash against documents (CAD), the buyer pays, usually through a bank, to receive the shipping documents that give access to the goods, such as the bill of lading. That makes CAD a payment term in the sales contract, settled by banks, while cash on delivery is an instruction to the carrier who delivers the goods.
Why does that matter? Because writing “CAD” on a waybill does not turn the carrier into a debt collector. If you want the carrier to collect money before handing over your goods, you need a clear cash on delivery instruction with an amount and an accepted payment method. And if you sell overseas with documents, you need the right arrangement with your bank instead.
Not sure which payment arrangement fits your shipments? Please contact team Trasegro.
How Cash on Delivery Works
Shipping cash on delivery usually follows five steps:
- Agreement: shipper and carrier agree that the shipment goes cash on delivery, for which amount and how the recipient may pay.
- Recording the COD amount: the amount goes on the waybill or shipping label, so the driver and the recipient can see straight away that payment comes first.
- Transport and presentation: the carrier takes the shipment to the delivery address and asks the recipient to pay the COD amount.
- Collection and delivery: the driver only hands over the goods once payment has been made. If the recipient refuses to pay, the carrier asks the shipper for instructions or returns the shipment.
- Remittance: the carrier transfers the collected amount to the shipper, minus the agreed COD fee.
Cash on Delivery in Freight Transport: The Rules
Cash on delivery is not just something for parcels and web shops. It also appears in business-to-business freight transport, for example with a new customer whose payment behaviour you don’t know yet. For those shipments, clear rules apply.
CMR Convention: in international road transport, the CMR consignment note states the amount to be collected on delivery. Under Article 21 of the CMR, a carrier who delivers the goods without collecting that amount must compensate the sender, up to the COD amount. The carrier can then claim it back from the consignee.
National conditions: domestic transport is governed by national law and the general conditions of carriage. In the Netherlands, for instance, the AVC 2002 conditions state that the COD amount may not exceed the invoice value of the goods, that cash is the default unless the shipper allows another payment method, and that the carrier must remit the money within two weeks of delivery.
Don’t assume one country’s rules apply everywhere. Payment methods, maximum amounts and payment terms differ per carrier and per destination. France, for example, has strict limits on cash payments, something to keep in mind with express transport to France. Always agree in writing how the recipient may pay.
Advantages and Disadvantages of Cash on Delivery
Certainty of payment: the shipper only releases the goods once they have been paid for. That is useful with new or unknown customers.
Trust for the recipient: the recipient only pays when the shipment has actually arrived and doesn’t have to pay an unknown party in advance.
Higher costs: cash on delivery is more expensive than a standard shipment. Carriers charge a fixed fee per shipment, a percentage of the COD amount, or both.
Risk of refusal: the recipient can change their mind at the door. The shipment then goes back and you pay for both journeys without making a sale.
Slower cash flow: the money only reaches your account after collection and remittance, not when the order is placed.
Can You Still Use Cash on Delivery?
That depends on where you ship. In countries such as the Netherlands and the UK, online payment methods have largely replaced cash on delivery for parcels, and some national postal operators have stopped offering it. In parts of Southern and Eastern Europe, the Middle East and Asia, cash on delivery is still a common way to pay, and many parcel carriers offer it on selected routes.
In business road transport, you can usually agree cash on delivery with your carrier or freight forwarder, as long as the amount and payment method are clearly stated on the waybill. Always check the conditions per carrier and per country before you promise cash on delivery to a customer.
Why Cash on Delivery Matters
Cash on delivery is a small line on a waybill with big consequences. A missing amount, an unclear payment method or a driver who delivers without collecting, and you end up chasing your money. On the other hand, a well arranged cash on delivery shipment can give you exactly the certainty you need to start working with a new buyer. Whether goods go out by home delivery or secure delivery, clear agreements about the handover matter as much as the transport itself.
This is where we come in. At Trasegro, we think along with you on the right documents, conditions and carrier agreements for every shipment, including when payment has to happen at the door. We listen, plan ahead and act quickly when it matters most.
Want to be sure your shipment is arranged properly, right up to delivery? Please contact team Trasegro.
